Cielo Mae C.

Rabotaso BSA-1D
Course: Managerial Economics
Assessment for Chapter 1

1. Define Managerial Economics.

Answer:
According to the information given, managerial economics applies economic
theory and methods to business and administrative decision-making.

- One standard definition for economics is the study of the production, distribution, and
consumption of goods and services. This indicates that economics includes any
business, nonprofit organization, or administrative unit.
- A second definition is the study of choice related to the allocation of scare resources.
This one establishes that economics is at the core of what managers of these
organizations do.

2. What makes Managerial Economics relevant to an organization? Explain.

Answer:
Managerial Economics is relevant to an organization; nonprofit organizations
and government agencies as well as conventional, for-profit business. Although the
underlying objective may change based on the type of organization, all these
organizational types exist for the purpose of creating goods or services for persons or
other organizations. More so, economics relates to an organization because it studies
how international financial conditions influence businesses and how businesses impact
people's financial choices. Macroeconomics studies national and international decisions
and how those choices shape the larger business world. Thus, Managerial Economics
applies the principles and methods of Economics to analyze problems faced by the
management of a business or other type of organizations and helps to find solutions that
advance the best interests of such organizations.

3. What are the roles of a Managerial Economist? Cite at least five (5).
Answer:
According to the resources given, a managerial economist helps the
management by using his analytical skills and highly developed techniques in solving
complex issues of successful decision-making and future advanced planning.

Some roles of managerial economist are as follows:

1. He studies the economic patterns at macro-level and analysis it’s significance to the
specific firm he is working in.
2. He has to consistently examine the probabilities of transforming an ever-changing
economic environment into profitable business avenues.
3. He assists the business planning process of a firm.
4. He also carries cost-benefit analysis.
5. At times, a managerial economist has to [prepare speeches for top management.
Cielo Mae C. Rabotaso BSA-1D
Course: Managerial Economics
Assessment for Chapter 1

4. In your own words, how is Managerial Economics relevant to the following:

a. Business Function
b. Personnel Management
c. Marketing
d. Production Management
Answer:
a. Managerial Economics and Business Function
- These two are relevant with each other in a sense that Managerial Economics are the
ones manage the business through units involved; these are:
1. Production and operations. One who may want to plan and schedule the level
of output for the next quarter.
2. Marketing. One who may want to know what price to charge and how much to
spend on advertising.
3. Finance and accounting. One who may want to determine whether to build a
new factory to expand capacity.
4. Human resources. One who may want to know how many people to hire in
coming period and what it should be offering to pay them.

- These are already mentioned in the resources given, and to my understanding; all these
involved some kind of quantitative analysis.

b. Managerial Economics and Personnel Management

- Managerial Economics relevant to Personnel Management in a way of analyzing the
economic capabilities and financial aspects of personnel problems. It explains the
economic implications of policies and strategies and judges their consistency with
respect to organizational objectives. In this way, the provision of a safety range for wage
negotiation with trade unions will be given.

c. Managerial Economics and Marketing

- Managerial Economics helps marketing in two ways according to the resource given.
- First, as a basic discipline, providing tools and concepts of analysis and;
- Second, as an integrating area, providing its judgement on the optimum sales volume
under the given cost function of a firm, market structure, and the objective function to be
optimized.
- Economics is of a great help to marketing in the sphere of pricing. Of the three basic
aspects of pricing are value theory, price theory, and pricing techniques.

d. Managerial Economics and Production Management

- Production is defined as the creation of utility by transforming input into output. It usually
refers to manufacturing activity and the term operations are used to denote a wider
Cielo Mae C. Rabotaso BSA-1D
Course: Managerial Economics
Assessment for Chapter 1

meaning, encompassing all economic activity which creates economic utility. A

knowledge of Economics would help operations personnel not only to economize their
production operations but also help them
▪ To monitor and analyze the input market,
▪ To monitor market maturity, technical maturity, and competitive maturity of product
being produced,
▪ To take decisions on production targets.